unaligned

JetBlue Airways has offered to buy Spirit Airlines for $3.6b, throwing a wrench into Spirit’s plan to merge with Frontier Airlines and create a behemoth budget carrier. Spirit and Frontier, both low-cost airlines, agreed in February to merge in a deal that the companies said would save consumers about $1b a year. JetBlue offered $33 a share in cash, Spirit said on Tuesday. Frontier’s shares have fallen since it and Spirit announced their deal, reducing the value of its offer, which has an implied value of about $25 a share at current prices.<br/>JetBlue Airways has offered to buy Spirit Airlines for $3.6b, throwing a wrench into Spirit’s plan to merge with Frontier Airlines and create a behemoth budget carrier. Spirit and Frontier, both low-cost airlines, agreed in February to merge in a deal that the companies said would save consumers about $1b a year. JetBlue offered $33 a share in cash, Spirit said on Tuesday. Frontier’s shares have fallen since it and Spirit announced their deal, reducing the value of its offer, which has an implied value of about $25 a share at current prices. Spirit said its board planned to review the bid, which it described as “unsolicited,” and would “respond in due course.” After news of JetBlue’s offer broke on Tuesday, Frontier said that the acquisition would limit options and harm consumers. Either deal would be sure to face antitrust scrutiny from the Biden administration, which has taken a tough stance on mergers and partnerships. <br/>

JetBlue Airways' CEO is confident his company’s proposed purchase of Spirit Airlines Inc. will pass muster with US regulators and suggested it may help overcome their legal challenge to an alliance with American Airlines Group Inc. “We think these deals are very complementary,” JetBlue CEO Robin Hayes said in an interview Tuesday, hours after the Spirit bid was disclosed. “We’re confident when you look at what we’re trying to do here, build a bigger brand to compete with the legacy airlines to bring more low fares to more customers, we’re going to have a very compelling argument.” The U.S. Justice Department is set to take JetBlue and American to trial in September, claiming their alliance coordinating flights in the U.S. Northeast is a de-facto merger, eliminates competition and will raise fares. The carriers say it provides more flight choices and have asked a judge to throw out the legal challenge. JetBlue on Tuesday announced an unsolicited offer to buy Spirit for $3.6 billion, potentially upsetting a competing bid by rival Frontier Group Holdings Inc. The combination, Hayes said, would broaden its operation and address a U.S. concern that its network is too concentrated. If the plan succeeds, JetBlue would drop Spirit’s bare bones service and ultra-low fares in favor of its own business model. <br/>

Frontier Airlines says JetBlue Airways’ unsolicited surprise offer to buy ultra-low-cost rival Spirit Airlines will make for higher fares and less competition. The Denver-based carrier says on 5 April that its bid to buy Florida-headquartered Spirit - announced in February - is a much better deal for both customers and shareholders, even if the JetBlue offer is worth more money. “A combined Spirit and Frontier will deliver $1 billion in annual savings for consumers and offer even more ultra-low fares to more places nationwide, creating America’s most competitive ultra-low fare airline,” Frontier says. “Unlike the compelling Spirit-Frontier combination, an acquisition of Spirit by JetBlue, a high-fare carrier, would lead to more expensive travel for consumers,” the airline continues. “In particular, the significant East Coast overlap between JetBlue and Spirit would reduce competition and limit options for consumers.” Earlier in the day, news leaked that JetBlue had made an unsolicited bid for Spirit worth $3.6b, or $33 per share, a significant premium over Frontier’s offer in February. JetBlue confirmed its bid, and Spirit added that it would “work with its financial and legal advisers to evaluate JetBlue’s proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders.”<br/>

JetBlue Airways will begin flights from Boston to both London Gatwick and London Heathrow airports this summer, a move that will expand the airline’s transatlantic network beyond its New York base. JetBlue will begin Boston-Gatwick flights on 19 July, followed on 22 August with the start of Boston-Heathrow flights, the airline says on 5 April. Nearly three years ago, on 10 April 2019, JetBlue announced its British invasion. The carrier began New York-London flights in 2021, but the status of Boston-London flights remained in flux, subject to slot availability and the worldwide pandemic. As with its JFK-London flights, JetBlue will fly Airbus A321LRs from Boston to London. Those jets will have JetBlue’s “Airspace” cabins, with 24 lie-flat “Mint” seats and 114 economy seats. As to be expected, JetBlue’s pricing for the Boston-London flights is aggressive. Boston-originating fares to Gatwick start at $499 round-trip in economy, and $1,949 for Mint. JetBlue is charging $50 more to Heathrow. JetBlue has long maintained London is the largest market the airline did not serve from Boston, where JetBlue has a unique operation that attracts a greater mix of business travellers. JetBlue is the leading carrier in Boston by virtually every metric – routes, seats, capacity and flights. The disruptive low-cost carrier enters a crowded, competitive field with its low-density narrowbody transatlantic fleet. British Airways has the most capacity between Boston and London, Cirium data shows.<br/>

JetBlue Airways’ pilots have ratified an agreement that ends a year-long dispute over aspects of the carrier’s “Northeast Alliance” (NEA) with American Airlines. Pilots, represented by the Air Line Pilots Association (ALPA), had charged that implementation of parts of the NEA violated their contract. “Since the NEA was announced in the summer of 2020, JetBlue pilots have enforced their contract and, when necessary, disputed the company’s ability to enter into this codeshare agreement with American Airlines without the consent of the pilots,” says JetBlue captain Chris Kenney, chair of JetBlue’s ALPA unit. Out of nearly 90% of eligible pilots voting, 60% ratified the agreement. Kenney says the deal “gives the pilot group a voice in this alliance and its continuation, [and] provides improvement to our current pay scale and sick-leave policies”. In February, JetBlue’s ALPA council said it would re-open contract negotiations 180 days before the collective bargaining agreement’s 31 July 2022 amendable date. Yesterday’s settlement appears to be an opening salvo in negotiations. Still, tall hurdles face the NEA, among them a US Department of Justice lawsuit, filed last September, seeking to block the deal. <br/>

Latin American bankers expect investors to overlook political worries in the region this year and keep investing in local companies, buoyed by strong commodities prices and a comfortable distance from geopolitical risks in eastern Europe. The volume of mergers and acquisitions in the region fell 30% in the first quarter from a year ago, while share offerings fell 69%, with rising interest rates and volatile markets hurting on both fronts, bankers and lawyers said. "Volatile markets impacted valuations and delayed deals," said Felipe Bittencourt, head of advisory at Vinci Partners. He said he expects lower M&A and equity issues volume in the region this year, as higher interest rates raise the required rates of return for capital invested in companies. However, several deal advisors said the opportunity for returns far from the war roiling Ukraine and its neighbors had kept investors engaged in Latin American markets. Bankers see a growing flow of deals among healthcare, energy and tech companies, including fintechs. "Despite recent problems in Europe and our upcoming elections, corporate and investor sentiment remain positive. We should have more deals," said Brazil-based Luiz Muniz, partner and head of Latin America at Rothschild & Co. He pointed out a healthcare deal is again topping the regional tables: hospital chain SA Rede D'Or Sao Luiz SA agreed in February to acquire insurer Sul America for 13b reais ($2.81b).<br/>

UK carrier Virgin Atlantic is finally transitioning from crisis-mode to recovery this year following an “intensely challenging 2021”, with an expectation that profitability will follow in 2023. Reporting its full-year 2021 results today, the long-haul operator said that while it went into last year with a positive outlook, the period ended up being even more challenging than 2020 by many measures, delaying its recovery until 2022. “2021 started with hopes for recovery, following the successful GBP1.2b solvent recapitalisation of the airline in September 2020, underpinned by more than GBP300m annual structural cost savings fully delivered,” says Virgin Atlantic CE Shai Weiss. “However, with ongoing restrictions and the rapid spread of the Delta and Omicron variants, customer demand was materially impacted and the year became even more challenging than previous, despite the vaccine rollout.”<br/>Virgin’s passenger capacity measured in available seat kilometres increased 9% in 2021 versus 2020 but passenger numbers were flat. Against pre-pandemic levels, capacity was 29% of 2019 levels and passenger numbers were at 27%. Record cargo revenue outpaced passenger income for the year, at GBP448m versus GBP410m, as the airline reported a pre-tax loss of GBP594m, which was a GBP62m improvement from the 2020 figure. Non-fuel costs were down 39% on 2019 at GBP1b, reflecting the impact of the aforementioned GBP300m in annual cost savings.<br/>

Ryanair expects average air fares during this year's summer peak season to be 5-10% higher than pre-pandemic prices in the same period of 2019, Group CE Michael O'Leary was quoted as saying on Tuesday. Lower capacity and increased passenger demand are already driving fares higher for those booking flights from June onwards, O'Leary told the Irish Independent newspaper, citing "very strong" forward bookings. "What we're seeing at the moment is prices are slightly lower than they were in 2019, pre-COVID, through March, April and May. They're somewhere between 5% and 10% higher at the moment through June, July, August and September," O'Leary said. "I think fares will be up this year in the peak summer months by between 5% and 10%." The airline on Monday reported that its passenger numbers topped pre-pandemic levels for the first time last month. read more O'Leary, who told the newspaper he had no intention of retiring after nearly 30 years in charge, said it would be too optimistic to say that COVID-19 is over for the airline industry but he does not expect any "COVID scares" this summer. "Travel is recovering strongly. I think people are fed up. We have been locked up at home for the last two years on Zoom calls. They want to go travel again. Families want to go on holidays again," he said. "We see that very strongly this Easter and also this summer. The forward bookings are very strong, but I think there will still be some disruptions."<br/>

PAL Holdings swung back to profitability – helped by a reduction in costs – as the group eyes growth and recovery this year. For the year to 31 December 2021, the parent company of flag carrier Philippine Airlines posted a net profit of Ps60.6b ($1.2b), compared to 2020’s Ps73b net loss. The group saw a 6% year-on-year increase in revenues to Ps58.7b, led mainly by an uptick in cargo revenue. Full-year expenses fell 23% to nearly Ps63b, as the group saw costs trimmed in various areas, including flying-related and maintenance costs. Against pre-pandemic 2019, however, PAL Holdings’ full-year revenue and expenses fell sharply, at 62% and 59%, respectively. The group credits the better financial performance to key unit PAL’s successful emergence from Chapter 11 restructuring. In September 2021, the carrier filed for voluntary Chapter 11 bankruptcy, having been heavily impacted by the coronavirus pandemic, which had shut down travel demand in the region. It exited Chapter 11 on 31 December 2021, armed with a court-approved recovery plan that will allow it to shave of over $2 billion in debt and gain access to $505m in equity and debt financing from its major shareholder. As part of the plan, the group will trim its fleet to about 70 aircraft. It already returned 10 aircraft in 2021 and will return an additional nine jets this year.<br/>

Vietnam low-cost carrier Vietjet Air had a challenging 2021, with revenue and gross profit down from 2020. For the 12 months ended 31 December, the carrier’s revenue from sales of goods and provision of services was D13t ($569m), down 27.7% from a year earlier, according to a company stock exchange filing. Vietjet says that the coronavirus pandemic led to “continued setbacks” during 2021, but that Vietnam’s vaccination campaign means the sector showed signs of recovery toward the end of the year. The carrier also suffered a full-year gross loss – revenue minus cost of sales – of D1.95t. Nonetheless, Vietjet was able to report a net operating profit of D178b, largely owing to its financial income quadrupling to D3.9t. It did not break down the financial income figure. On a net basis, the carrier says it generated a net profit after tax of D100b. “Vietjet has worked to optimise the operating cost per flying hour and lower aircraft renting costs throughout the year,” it says.<br/>